In the week ending August 10, $40.3 billion was pulled out of long-term mutual funds of all types, the Investment Company Institute reported.
It’s a bear market
The Dow Jones Industrial Average rallied Tuesday on fairly light volume. Expect resistance at 11500. This is a bear market, with reactions to good news likely to be short — and declines from bad news severe. Target for the next decline is 10000*.
* Target calculation: 11000 – ( 12000 – 11000 ) = 10000
TSX 60 headed for long-term support
Canada’s TSX 60 Index is falling sharply, headed for medium-term support at 665, but long-term support at 650 is just below. Breakout below 650 would warn of another down-swing, with a target of 580*.
* Target calculation: 650 – ( 720 – 650 ) = 580
Nasdaq breaks support
The Nasdaq 100 broke support at 2050, warning of a down-swing to 1900*. Follow-through below last week’s low of 2040 would confirm. The latest peak on 21-day Twiggs Money Flow, barely breaking the zero line, indicates strong medium-term selling pressure.
* Target calculation: 2050 – ( 2200 – 2050 ) = 1900
The Dow is headed for a similar test: follow-through below 10600 would confirm a down-swing to 9600*. Higher volumes indicate the presence of buyers and failure of support would prove seller’s dominance.
* Target calculation: 10800 – ( 12000 – 10800 ) = 9600
The S&P 500 is testing support at 1100 on the weekly chart. Failure would signal a test of 1000. 13-Week Twiggs Money Flow below zero warns of further selling pressure.
* Target calculation: 1125 – ( 1250 – 1125 ) = 1000
ICI – Long-Term Mutual Fund Flows, August 17, 2011
Total estimated outflows from long-term mutual funds were $40.29 billion for the week ended Wednesday, August 10, the Investment Company Institute reported today.
In Praise of Timely, Blatant Incompetence | Mike Shedlock | Safehaven.com
Many are in shock that the S&P downgraded debt of the US from AAA. Not me. It was long overdue.
However, the S&P proved it was incompetent in the way it made the downgrade. Pray tell how can a rating agency make a $2 trillion error? The answer is obvious: sheer incompetence.
The irony is Moody’s and Fitch proved they are incompetent by not downgrading U.S. debt.
via In Praise of Timely, Blatant Incompetence | Mike Shedlock | Safehaven.com.
30-Yr. Mortgage Rate: New Low
The average rate on a 30-year fixed mortgage has fallen to its lowest level on records dating to 1971. The rate on the most popular mortgage dipped to 4.15 percent from 4.32 percent a week ago, Freddie Mac said Thursday. Its previous low of 4.17 percent was reached in November.
The last time long-term rates were lower was in the 1950s, when 30-year loans weren’t widely available. Most long-term home loans lasted 20 or 25 years.
Dow threatens support
The Dow Jones Industrial Average fell sharply on Thursday, accompanied by strong volume. Failure of support at 10700 would complete the dead cat bounce, offering a target of the 2010 low at 9600*.
* Target calculation: 10800 – ( 12000 – 10800 ) = 9600
Loonie turns
After breaking its long-term rising trendline against the greenback, followed by primary support at $1.01, the Canadian Loonie is testing resistance at $1.02. Weak economic data should increase selling pressure. Reversal below $1.01 would confirm the down-trend, offering a target of $0.96*.
* Target calculation: 1.01 – ( 1.06 – 1.01 ) = 0.96
US debt shrinkage slows
Having fallen by almost $1 trillion since its peak in 2009, the decline in US bank lending is slowing, with the annual rate of change approaching zero. A stable level of debt would reduce deflationary pressure and signal that residential and commercial real estate prices are bottoming.
Most of the money pumped into the economy over the last year leaked straight back out, with excess bank reserves deposited with the Fed rising by more than $500 billion.
